How to Fix 3 Retirement-Savings Flaws

In its annual snapshot of retirement saving, investment giant Vanguard says more people are socking money away and doing it effectively with balanced, diversified target-date funds. But there’s room for improvement. Below, some savings shortcomings and how to fix them.

1. Low savings rate. More than 60% of retirement plans that enroll workers automatically do so at default rates of 3% of income or less. The fix: Boost your rate with the goal of getting to 12% to 15% (including any employer match) as quickly as you can.

2. Extreme investing. Roughly one in eight employees had portfolios that held either no stocks or nothing but stocks. The fix: Accounting for age and risk tolerance, keep stocks within a range of, say, 90% for aggressive investors with a horizon of 30-plus years to 50% for conservative investors whose goal is 10 years out or less. Most retirees should keep some money in stocks.

3. Too much company stock. Eight percent of plan participants still hold outsized stakes. The fix: Your human capital is already invested in your company—it’s the source of your income. Limit company stock to no more than 10% of your portfolio.